Why Aren't Investment Bank Trading Revenues Picking Up?

The video discusses the challenges faced by large banks in fixed income trading, particularly in market making, due to changes in trading models and high costs of capital. It highlights the impact of volatility on trading revenues and distinguishes between good and bad volatility. The video also examines current trends in the credit market, including the influence of the ECB's bond-buying program.

What has been a significant challenge for large banks in fixed income trading?

• Lack of skilled traders

• Decline in trading revenues despite market volatility

• High government bond yields

• Increased competition from smaller banks

Why is holding positions no longer a viable strategy for traders?

• High capital costs make it unsustainable

• The market has become too unpredictable

• It requires too much time and effort

• Regulations have banned holding positions

What is the difference between good and bad volatility according to the transcript?

• Good volatility leads to stable prices, bad volatility leads to price drops

• Good volatility is predictable, bad volatility is random

• Good volatility allows for profitable trades, bad volatility does not

• Good volatility is caused by economic growth, bad volatility by recessions

How did Barclays manage to perform well in Q1 2016?

• By increasing their market share

• By holding more positions

• By not holding positions and avoiding mark to market downturns

• By focusing on government bonds

What impact does the ECB's bond buying have on the market?

• It reduces bond issuance

• It stabilizes bond performance

• It increases bond volatility

• It decreases bond prices